The AML/CFT Levy in Practice: A Look at What Law Firms May Actually Pay

A DNFBP perspective on the proposed levy and what it may mean at the firm level.

The Ministry of Justice is currently consulting on proposals to introduce an AML/CFT industry levy to partially fund New Zealand’s anti‑money laundering framework. Much of the discussion has focused on the overall size of the levy and which sectors will contribute. But for reporting entities, a more practical question is: what might this actually mean at the firm level? Subject to legislation being passed, the proposed levy would commence in 2027, with the first collection expected from 1 July 2027.

The DNFBP Share

Under the consultation proposal, the AML/CFT system would recover approximately $27 million annually through levies.

The proposed sector distribution is:

- Banks: 85%

- Casinos and TAB: 9%

- Other financial institutions and DNFBPs: approximately 6%.

For DNFBPs collectively, this represents about $1.6 million per year. This group includes sectors such as law firms, accountants, real estate agents, trust and company service providers, and conveyancers.

Three Possible Levy Models for DNFBPs

The consultation proposes three possible ways to allocate the DNFBP share of the levy.

Option 1 — Flat levy per reporting entity - Every reporting entity that submits an AML/CFT annual report would pay the same amount. Based on current estimates, this would be approximately $404 per entity per year. The model is simple to administer but does not distinguish between small and large reporting entities.

Option 2 — Sector levy based on supervisory activity - Levy costs would be allocated across sectors based on the level of supervisory activity, such as compliance assessments. Sectors requiring more regulatory oversight would therefore contribute a larger share, although individual firms within each sector would still pay the same amount.

Option 3 — Tiered levy based on scale (preferred model) - The Ministry’s preferred option is a tiered approach, where the sector share reflects supervisory activity but individual entities contribute based on scale, such as the number of customers subject to CDD or the value of transactions handled. Smaller entities may fall below the threshold, while larger firms would contribute more.

What the Preferred Model Suggests for Law Firms

Within the DNFBP sector, the consultation estimates that law firms would contribute approximately $676,000 annually across the sector. The proposed levy for individual firms would depend on the number of customers on whom customer due diligence (CDD) is conducted, based on annual reporting data.

Proposed bands:

- 1–499 customers: Exempt

- 500–1,000 customers: $1,779

- 1,001+ customers: $3,094

This means that many smaller firms would not fall within the levy at all, while larger firms with higher client volumes would contribute a modest annual amount.

What This Looks Like in Practice

Consider a firm conducting CDD on around 1,000 clients per year. Under the proposal, that firm would fall within the $1,779 levy band. Spread across those clients, the cost equates to roughly $1.78 per client — or approximately $2 if passed through. In the context of typical legal transactions, this represents a very small incremental cost per matter.

What the Levy Is Intended to Fund

The consultation explains that levy funding would support key components of the AML/CFT system, including:

- supervisory capability and industry engagement

- financial intelligence analysis through the Financial Intelligence Unit

- system‑wide risk assessments and intelligence products

- guidance and outreach to reporting entities

- preparation for New Zealand’s next FATF mutual evaluation.

The policy rationale is that these functions support the integrity and credibility of the financial system, which benefits both the wider economy and those operating within it.

Will DNFBPs See Value?

For DNFBPs, the key question will likely be whether the additional funding translates into practical improvements in how the system operates. Reporting entities may reasonably expect that a better‑resourced AML/CFT framework will result in clearer supervisory guidance, more consistent regulatory expectations, stronger intelligence outputs, and improved engagement between supervisors and industry.

A Question of Proportionality

For most law firms, the AML/CFT levy would likely be far smaller than the existing compliance costs associated with the regime, including technology, staff training, independent audits and internal compliance processes. Viewed at the level of an individual firm, the proposal suggests that the financial impact for many DNFBPs may be relatively modest. The longer‑term test will be whether the additional resources deliver a system that is clearer, more responsive, and better aligned with the risk‑based approach that underpins the regime.